This is possible, through use of the YAHOO.Bubbling library, which we use to message between components (although not currently on the dashboard).
Customise the Recently Modified Documents dashlet so it fires a custom event when you click on a document, e.g. YAHOO.Bubbling.fire("displayWordDocument", params) where params contain enough information to identify the document in the display dashlet - e.g. the nodeRef.
The in the display dashlet: YAHOO.Bubbling.on("displayWordDocument", this.onDisplayWordDocument, this) and define a JavaScript function to handle the event.
The Share code contains lots of examples where we use the Bubbling library already, so this should be possible without too much trouble.
Thanks,
Mike